Freemium hell - giving away the store

I remember the day we launched our “generous” free plan like it was a victory. We thought we’d cracked growth. Users poured in. Numbers looked sexy on the dashboard. “Look at our traction,” we told ourselves. “We’re killing it.”

But something gnawed at the back of my mind. Our paying conversions were flat. Zero momentum. Months went by. The free users were happy, our egos were fed, and revenue barely moved.

That’s freemium hell.

Here’s the truth most founders don’t want to admit: giving away the store feels good. It feels like you’re building something people love. But if your free plan doesn’t create a genuine itch for an upgrade, it’s just an expensive illusion of traction.

The Scar

I learned this the hard way.

We had a clean, polished product. Maybe too polished. We thought generosity would fuel virality. So we made almost everything free. Unlimited access. Full features. Free forever.

I wish I could tell you users loved the product so much they upgraded spontaneously. They didn’t.

Instead, they used it, ignored upgrade prompts, and left the rest of us staring at dashboards that looked like a battlefield after a parade. We were bleeding money on servers, support, and marketing while our MRR stubbornly refused to move.

It stung.

Because here’s the kicker: our intuition wasn’t wrong. Users liked the product. They just didn’t need to pay for it. The moment we removed friction, the perceived value plummeted. Free had replaced necessity.

Why Freemium Fails

Freemium isn’t inherently bad. It works if the free tier creates desire, not satisfaction.

We skipped that part. Instead, we gave a full meal, hoping users would pay for the dessert they already had. That doesn’t work.

Here’s a mental model I wish someone had tattooed on my forehead back then:

• Free plan = teaser. Not the movie. Just the trailer.

• Upgrade = solution to a real pain. Not an arbitrary limit.

• Ambition = paid plan feels like an upgrade, not a penalty.

We violated all three. Users got the movie for free. No one paid for the DVD.

The Lessons

1. Scarcity isn’t cruel, it’s clarifying 

   I used to think limiting features was mean. It felt like a betrayal of generosity.

   Turns out, scarcity is a service. It shows users what they’re missing and makes the upgrade worth it. Free without boundaries is indulgence. Indulgence rarely inspires commitment.

2. Metrics lie if context is ignored 

   Our dashboards told a story: growth. Look at those signups. Look at those downloads.

   But growth without revenue is a mirage. Vanity metrics seduce founders into thinking they’re winning while the company’s bank account quietly sobs in the corner.

3. Free users are not customers 

   I repeated this mantra too late: not every user counts. Many are just observers, silently validating nothing. Treat them well, yes. But don’t confuse love with monetization.

4. Conversion is a feature, not an afterthought 

   I once thought onboarding, support, and a polished UI were enough. They aren’t. If you want freemium to work, the product must actively nudge users toward the paid experience. Upgrade has to feel inevitable, not optional.

5. Expect resistance 

   People will complain. “Why can’t everything be free?” They will compare to competitors. They will threaten to leave. That’s fine. Resistance is feedback that your product is valuable. If no one pushes back, maybe you’re not charging enough.

The Turning Point

After months of stagnation, we stripped down the free plan. We made choices that felt harsh: limits on key features, usage caps, and removing some bells and whistles.

The first week was ugly. Complaints, churn, frustration. My team questioned me. I questioned myself.

Then something shifted.

The paid plan started converting. Users realized the free plan was insufficient for their needs. Scarcity made value obvious. Desire replaced comfort. And for the first time in months, our revenue chart began climbing. Slowly, but unmistakably.

I’ll never forget that day. The realization that free isn’t a growth hack. Free is a trap if misused.

The Mental Models I Carry Now

• “Freemium should be hunger, not a feast.” Give enough to taste. Leave them wanting.

• “Revenue is the metric that teaches.” All other metrics are entertainment.

• “Free users are free thinkers, not free money.” Respect them, but don’t confuse attention with conversion.

• “Every upgrade point should feel earned.” Friction is not evil. It’s an opportunity to create meaning.

A Few Contrarian Notes

1. Not all products need freemium
   Sometimes, free is just an expensive marketing stunt. If your product doesn’t naturally create a desire for more, skip freemium. Sell, validate, repeat.

2. Virality doesn’t pay the bills
   Those growth slides with logos and user numbers? A mirage without revenue. I’ve been seduced. I’ve been humiliated. Learn from my scars.

3. Pain drives monetization
   Free can show value. But only paid solves pain. If your free plan solves everything, why would anyone pay? Pain is persuasive. Scarcity sharpens it.

Final Reflections

Freemium felt like generosity. It was actually cowardice disguised as growth. We were afraid to ask for money, afraid to force users to make a decision, afraid to disappoint.

But disappointment is survivable. Business death is not.

I look back at those months and see it clearly: freemium is a tool, not a badge of honor. Use it wisely. Otherwise, you’re just giving away your hard work.

If I had one thing to hand to my past self, it would be this:

Unfinished edges to chew on

• Could we have launched with a small paid plan and avoided the trap entirely? Probably.

• Did we need a freemium at all, or was it ego-driven vanity? Yes, that one hurt to admit.

• Are there products that can sustain generosity without killing revenue? Only if the upgrade itch is irresistible.

The line between “generosity” and “giving away the store” is razor-thin. Step too far, and you’ll see why scars are sometimes the best teachers.